Big Yellow Group, a leading self-storage company in the U.K., has announced its intention to raise approximately £110 million ($134.6 million) through a share placement. The funds will be used to expand the company’s store pipeline.
The placing, which is open to existing shareholders as well as institutional and retail investors, will determine the issue price through an accelerated bookbuilding process. The total number of shares issued will not exceed 18.4 million.
Upon completion of the expansion, which is expected to add 902,000 square feet of storage space, Big Yellow Group anticipates a projected net operating income of £30.4 million. This represents a 13% return on incremental capital invested.
The majority of the planned expansion sites are located in or near London, a market that has shown strong performance recently. Executive Chairman Nicholas Vetch stated that the net proceeds will be utilized to increase capacity in London, the company’s strongest market, as well as to monetize existing land holdings. Vetch also emphasized that the placing is expected to have a positive impact on earnings in the short term.
Big Yellow Group reported a 6% increase in revenue for the six months ending September 30. The company experienced particularly robust demand and revenue growth in London and the South East, which accounted for three-fourths of its total revenue during that period.